Best Upgrades ProAssurance and Some Subs Ratings; Outlook Stable

June 20, 2013

A.M. Best Co. has upgraded the financial strength rating (FSR) to ‘A+’ (Superior) from ‘A’ (Excellent) and the issuer credit ratings (ICR) to “aa-” from “a+” of the subsidiaries of ProAssurance Corporation (PRA). These include: ProAssurance Casualty Company, based in Okemos, Michigan, ProAssurance Indemnity Company, Inc. and ProAssurance Specialty Insurance Company, Inc. The companies are collectively referred to as ProAssurance Group and are domiciled in Birmingham, Alabama, unless otherwise specified.

Best has also revised the outlook on the ratings to stable from positive.

Best upgraded the ICR of PRA to “a-” from “bbb+”, as well as the indicative debt ratings under the shelf registration to “a-” from “bbb+” on the senior unsecured debt, to “bbb+” from “bbb” on the subordinated debt and to “bbb” from “bbb-” on the preferred stock of PRA. The outlook for these ratings has been revised to stable from positive.

In addition Best upgraded the FSR to ‘A’ (Excellent) from ‘A-‘ (Excellent) and the ICR to “a” from “a-” of the additional subsidiaries of PRA, Medmarc Casualty Insurance Company and Noetic Specialty Insurance Company, both domiciled in Montpelier, Vermont. The ratings have been removed from under review with positive implications and assigned a stable outlook.

Best has also affirmed the FSR of ‘A’ (Excellent) and ICR of “a” of Podiatry Insurance Company of America (PICA) and the FSR of A- (Excellent) and ICR of “a-” of PACO Assurance Company, Inc. (PACO), both domiciled in Springfield, Illinois, subsidiaries of PRA. The outlook for these ratings remains stable.

The upgrading of the ratings of ProAssurance “reflects its superior capital strength, excellent long-term trend of favorable operating performance and strong business profile,” Best explained.

“The group’s ongoing underwriting success is credited to conservative reserving practices, disciplined underwriting standards and a focused proactive claim handling philosophy. The rating considers the group’s market position across multiple jurisdictions and diversification across multiple aspects of medical professional liability and legal professional liability lines.

“The ratings are positively impacted by the depth and breadth of the organization’s enterprise risk management programs and policies. The outlook is based on the expectation of continued superior performance across multiple aspects of the organization.”

Best said the upgrades for Medmarc and Noetic’s ratings “reflect their excellent capital position, ongoing strong operational results and position in the market as leader in medical device product liability. The ratings also receive support from the companies’ relationship with its ultimate parent, PRA, the continued integration of the company into the organization and explicit operational and financial support provided by members of the group.

“The rating actions also reflect the financial flexibility afforded to all of PRA’s subsidiaries. PRA’s financial leverage is very conservative, interest coverage is strong, and it holds significant levels of cash and short-term investments outside of the insurance operating companies that are available for use without regulatory approval.”

Source: A.M. Best

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